Survey: Large cash reserves will drive M&A activity in 2014

Thursday, December 05, 2013 11:06 AM

Nearly two-thirds of mergers and acquisitions professionals and investors in a recent survey said they expect their U.S. companies or clients to initiate at least one acquisition in 2014, the Denver Business Journal reported.

The 2013 M&A Outlook Survey by KPMG LLP, a U.S. audit, tax and advisory firm, also found that 36 percent of respondents expect that their companies will complete a divestiture in 2014. More than 1,000 people participated in the survey.

Among the 145 C-level executives surveyed, nearly three-quarters anticipate that their company will make an acquisition in 2014, compared with about half in 2013.

Large cash reserves will be the leading driver for deals next year, according to 25 percent of respondents, followed by opportunities in emerging markets (17 percent), improved consumer confidence (16 percent) and availability of favorable credit terms (16 percent).

"We've seen a shift in the marketplace from when companies divested non-core assets as a result of the economic downturn to today, pursuing inorganic growth," said Dan Tiemann, KPMG's transactions and restructuring lead for the Americas.

"With favorable conditions in place for increased M&A activity, such as significant cash on corporate balance sheets, more confidence in the overall economy and continued low interest rates, expanding core business functions through acquisitions is an appealing strategy for organizations," Tiemann said.

Seventy-nine percent of respondents said they expected their deals to be valued at $250 million or less, compared with 68 percent who thought deals would be in that range last year.